Question

H of his son's birthday thereinafter into the savings account, and the last deposit is made on the 19 th

birthday. Starting from the 12 th
birthday, Tom withdraws $500 from the savings account on each birthday to purchase a birthday gift until the 19 th
birthday, and the last withdrawal is made on the 19 th
birthday. Tom plans to withdraw all the money from the savings account on the 20 th
birthday of his son and use the money for college tuition. The interest rate is 5.21%, compounded bimonthly. "Bimonthly" can refer to something happening "every two months" or "twice a month." In this problem, we assume that "bimonthly" means "occurring every other month."
(A) What is the nominal interest rate per year (r) ?

Answer 1

The question pertains to calculating the nominal interest rate per year from a bimonthly compounded rate of 5.21%. However, since the exact compounding rate per period is not provided, we cannot accurately calculate the nominal annual rate without additional information.

Step-by-step explanation:

The student is asking about calculating the nominal interest rate per year (r) for an account that compounds interest bimonthly at a rate of 5.21%. The nominal interest rate is the rate before adjusting for inflation and is not compounded. To find the nominal annual interest rate from a bimonthly compounded rate, we apply the formula r = m × i, where m is the number of compounding periods per year and i is the interest rate per compounding period. Since the interest compounds bimonthly, there are 6 compounding periods per year (every other month).However, the question does not provide the exact bimonthly interest rate (i), only the effective annual rate (5.21%). To calculate the bimonthly rate (i), we use the formula (1 + i)m - 1 = effective annual rate. Solving for i and then finding r requires some algebraic manipulation which the question does not give us enough information to complete accurately.In conclusion, while we understand the concept of nominal interest rate and how to calculate it from a compounding rate, we need more specific information to provide the main answer.